Viewpoint: In San Francisco, can we build in anyone’s backyard?

The San Francisco Board of Supervisors recently overturned the previous approval of a 13-story mixed-use development site at 450 O’Farrell St. in San Francisco with an 11-0 vote. This project has been on the books for years and the Fifth Church of Christ (owners of the project) had partnered with a developer and planned to use the proceeds to save their church.

Initially, the project consisted of 176 individual apartments (45 studios, 69 one-bedrooms, and 62 two bedrooms.) The owners sought and won approval from the Planning Commission to turn the project into 300 group housing units. The Board of Supervisors turned down the project because of pressure from neighborhood housing groups which called group housing projects “anti-family” and “anti-community.”

Supervisor Hillary Ronen felt that the board needed to make a statement against the growing trend of approved entitled projects, which were seeking significant changes to their projects with “very little process and consequences.”

What is interesting about this case is that there was no discussion as to why so many projects are seeking changes and what the financial consequences are for any owner or developer who has to go back to the drawing board if a project gets rejected.

The reason why projects are being reworked is quite apparent — they no longer make any sense to build. Issues include the uncertainty in market demand, general high cost of construction, or massive building delays and rejection of their permits that could put a stop to any project. The Board of Supervisors and neighborhood groups think that by stopping the proposed project for group housing, that the developers will somehow go back and make the previous apartment development plan somehow now work. The reality is that nothing will get built and the city will lose all the way around. Less housing less job creation and less property tax revenue.

This is yet another example of where our city leadership does not have a clue as to the costs of developing projects the financial risk at stake. At the end of the day, a project must make economic sense to the person building it. If it doesn’t, then they won’t build it.

Similarly in the Sunset district, an affordable housing project at 2550 Irving St. has become a major political battle, pitting affordable housing advocates and city officials against residents who object to the project. The west side of San Francisco has seen very few affordable housing projects, with the more affordable projects located on the city’s eastern side. This project appeared to be a no-brainer. But neighborhood opposition has become intense, with neighbors concerned about everything from traffic and contamination issues to drawing in more homeless and those struggling with addiction to their neighborhood.

These projects are a small sample of how fouled up our planning processes are. The length of time necessary to get through the process and its costs only allow big developers with deep pockets to shell out on projects with the highest profit margins. Only they can take on the financial risk if their project does not get approved. Many have simply given up on developing in our city. This strategy will only further devastate our city’s affordable housing needs.

As a first step, our city officials need to look at areas that offer the best chance of approval and neighborhood support. An example of this would be Union Square. Talk has already begun about the need to take the upper levels of our retail buildings and convert them into housing. This makes sense in so many ways and could provide an abundance of housing very quickly as most of the facilities would only require interior renovation rather than full-scale new construction. Yet, Mayor London Breed and the board remain quiet when it comes to this opportunity.

Both projects continue to show how hard it is to build in San Francisco. Everyone will say they support more affordable housing and development, but the reality is this “not in my backyard” mentality will get us nowhere. We need to figure out what backyards we can build in and our city officials need to become proactive in getting this done.

Hans Hansson, a San Francisco resident, is the principal and founding partner of Starboard TCN Worldwide Commercial Real Estate. This article was published by The San Francisco Business Times. Oct 22, 2021, 4:25pm EDT.

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